No roll back oxf tax cuts: FM

New Delhi, July 7 (PTI) The Indian Government Tuesday
assured industry that it will not roll back the tax cuts
announced in the stimulus packages and its high market
borrowings of around Rs 4 lakh crore will not dry up resources
for the private sector.

"I have no intention of rolling back (tax cuts given
in stimulus packages)... No doubt I have taken a risk. A risk
of leaving fiscal deficit of 6.8 per cent, which is perhaps
the highest ," India's Finance Minister Pranab Mukherjee said
in his interaction with industry chambers, CII, Ficci and
Asshocham.

The Finance Minister also said that he would strive to
bring down high fiscal deficit of 6.8 per cent of the GDP
projected for the current fiscal to 5.5 per cent in the next
fiscal and four per cent in 2011-12.

"Therefore, I myself and my colleagues in the Finance
Ministry have undertaken a strenuous job that in the next 7-8
months, we shall have to do a lot of work so that we can reach
this target in 2010-11 and 2011-12," Mukherjee said.

High fiscal deficit will force the government to
borrow around Rs four lakh crore from the markets this fiscal,
which many fear would crowd out private sector investment, an
apprehension that led to a crash in stock markets on Monday.

It is this fear that Mukherjee allayed Tuesday.
"I do agree that (there is apprehension that) whether the
private sector will be elbowed out by the substantial
borrowings by the Government. Surely we will have to make our
planning in such a way that this aspect is taken note of. I
can assure you, the intetion is not to crowd out the private
sector from the market," Mukherjee said.

He said genuine requirement of the private sector has to
be taken note of and that is one of the important challenges
that the Government has to face.

The government has cut excise duty by six per cent and
service tax by two per cent in three stimulus packages, which
together with increased public expenditure has widened the
fiscal deficit.

Besides, it also abolished Fringe Benefit Tax, an
irritant for corporates, and withdrawn the proposed Commodity
Transaction Tax in the Budget on Monday.

Fiscal deficit touched 6.2 per cent last fiscal and is
projected to widen further to 6.8 per cent in the current
fiscal as tax receipts are estimated to decline and public
expenditure projected to rise above Rs 10 lakh crore for the
first time in the history of independent India.

"No doubt, I have taken a risk, and there is a fiscal
deficit of 6.8 per cent, which is perhaps the highest...While
tax receipts were on downward curve, public expenditure have
to be boosted to create demand and fund infrastructure,
especially in the rural areas," he said. PTI RR
RAI